Intertwined: Cigarette smuggling and militancy

Links between tobacco smuggling and extremist groups are strong, depending on the country, says expert

Omar Shariff, Deputy GCC/Middle East Editor
15:04 November 15, 2017
Dalia Ghanem Yazbeck

Dubai: With the relentless war being waged globally against extremism, and the United States’ unending “war on terror”, a lot has been done to curtail means by which extremist groups fund their activities. As smuggling of narcotics, gold or weapons became more and more difficult, increasingly, such groups, especially in the Maghreb and Sahel region, turned to products that are relatively easy to smuggle, and do not attract the same kind of scrutiny from security agencies. One such product is cigarettes.

A KPMG study titled “Illicit Cigarette Trade in the Maghreb Region”, found that one in five cigarettes smoked in the region were illegal, representing 13 billion cigarettes in total. The report also concluded that if these cigarettes had been purchased and imported legally, an additional $565 million in tax revenues would have been made. Over 7.4 billion of the illicit cigarettes are believed to originate from trademark owners.

The United Nations estimates that Algeria, Egypt, Libya, Morocco, and Tunisia consume 44 per cent of all the black-market tobacco in Africa.

Sometimes, the extremists groups do not play a direct role in the smuggling of items such as cigarettes as they consider the product to be forbidden in Islam. They might, instead, provide safe passage and tax other smugglers and criminal networks that do.

To be sure, smuggling operations in the Maghreb go well beyond cigarettes. In the region, all countries have placed heavy subsidies on selected goods. The cost of one item in one country differs widely from that of the same item in another. This gives smugglers an obvious incentive. A case in point is the price of petrol: In Algeria, due to heavy state subsidies, it is one-thirds the price in Tunisia. Thus, this gives rise to smuggling operations along the border.

In fact, some regimes, like that of Muammar Gaddafi’s in Libya, actually encouraged their border communities to engage in smuggling activities. The late dictator allowed what he called “people’s markets” to emerge along the vast borders where black market goods were openly traded. He did so for his own selfish ends: He wanted the border communities to sustain themselves without relying on the central government in Tripoli.

So, how strong are the links between cigarette smuggling and terrorism? Dr Dalia Ghanem Yazbeck, Resident Scholar at Carnegie Middle East Centre in Beirut, believes links between smuggling and extremist groups are strong, depending on the country. In an interview with Gulf News, she said: “For a region such as the Sahel, groups such as the former Al Qaida in the Islamic Maghreb (AQIM), now called Jamma’at Nusr Al Islam Wal Muslimeen (JNIM), these links are strong. The group took advatange of the conditions in the Sahel and of the already existing smuggling roots, to enhance its financial capabilities. JNIM, for instance, did not take part directly in the smuggling of drugs and cigarettes but takes a tax from the smugglers to protect their convoys, hide their products and so on ... There are also trafficking routes in Lebanon, northern Iraq, and Turkey.”

One of the best known cases of extremists smuggling cigarettes to finance their activities is that of the Algerian Mokhtar Belmokhtar, who was recently sentenced to death in absentia by Algeria. So prolific were Belmokhtar’s activities that he earned the nickname ‘Mr Marlboro’. He has been reported dead many times, most recently in a US drone strike in Libya this June. Among the attacks blamed on him, the deadliest was the assault on an internationally run Algerian gas plant in January 2015.

Following the Daesh phenomenon over the past three years, there has been an increased focus on extremist groups profiting through the illegal trade in items such as cigarettes. Daesh is said to have made more than $1 billion from the illegal trade in fuel and cigarettes.

Given the fact that prices of cigarettes differ so much from country to country, cigarette smuggling has become very lucrative for everyone involved. Fighting the scourge has proved very difficult. Yazbeck noted: “First of all, it should be said that raising taxes and the prices of cigarettes is counter productive. Why, despite all the cuts that every middle man takes during the trip, cigarettes still reach Europe at a very attractive price. So that means people, despite the increase in taxes, will still find the price attractive, and will continue to buy them because we, as consumers, are always in search of the best price regardless of the source of the product. Also, the issue is that companies do not have any control over the distribution of their products.

“Another issue is that the different states do not have the same capabilities in terms of security. They are in need of building capacity in criminal justice and law enforcement as much as a security sector reform to know how to tackle these issues and train people in the fight against illicit trade. In addition, and more importantly, for instance in the Maghreb-Sahel region, many communities live on smuggling activities, such as [smuggling] oil, sugar, cigarettes. They do not perceive it as a ‘crime’; for them, it is a way to secure their livelihoods. So if you crack down on smuggling networks, you need to give these communities, especially border communities, an alternative. Otherwise, they will go back to these activities. In Mali, for instance, in the aftermath of the 2012-2013 [French] intervention, the tourism sector was dying and many communities had to move to smuggling to live.”